China further relaxes restrictions on foreign investment access

Q: What changes have been made to the incorporation and registration procedures of foreign-funded enterprises under the current policy?

A: Pursuant to the Ministry of Commerce’s Decree No 2 of 2015, stipulations requiring registration of contributions to registered capital also apply to foreign-funded enterprises, removing restrictions on registered capital, capital contribution period, etc. The subsequent Interim Measures for the Administration of Incorporation and Alternation Filing of Foreign-Funded Enterprises (the Interim Measures) has significantly simplified the incorporation and alternation procedures of foreign-funded enterprises.

For a foreign-funded enterprise not subject to any special access controls of the government, the original mechanism requiring prior approval from the competent commerce authority will be replaced by the filing mechanism. This simply requires the enterprise to submit documents via the integrated administrative system. Under the new mechanism, the procedures will be completed within three working days of acceptance. Documents such as the credit report of foreign investors and the feasibility study report are no longer required. The Interim Measures, as amended on 29 June 2018 (the Revised Measures), bring about further simplification of the incorporation procedures, which enables filing and registration to be completed on a consolidated basis.

The Interim Measures state that the filing mechanism also applies to transactions where foreign-funded enterprises or foreign-funded listed companies resulting from acquisition or merger accept strategic investments from new foreign investors, provided that these entities are not subject to any special access controls of the government. But the Revised Measures exclude application to transactions where non-foreign-funded listed companies accept strategic investments from foreign investors.

Jeremy Dai is a partner at AnJie Law Firm